Bundled Payments Programs Becoming More Common in Healthcare Despite No Comprehensive IT Solution
Recent CMS rule changes have once again brought bundled payments into the national spotlight. Addressing established uncertainty amongst payers and providers on the future of bundled payments, Chilmark's latest report analyzes the market trends shaping this space and describes available IT solutions to help healthcare organizations (HCOs) adapt to these new value-based payment programs. The report, Bundled Payments: Current Strategies and Tools (cost = $5,000), starts by shedding light on the challenges that have plagued efforts to implement these payment models. This includes questions about how smaller-scale HCOs will adapt to increased collaboration requirements, to what extent actual cost savings can be realized through bundling, and concerns about the efficacy of existing IT solutions for enabling the payment models -- technology that is essential to actually make these models realistic for providers to adopt. Despite these very real concerns, payer motivation to explore bundled payments as a solution to rising healthcare costs remains high. Chilmark's research illuminates why and how HCOs need to prepare to meet the increased patient engagement and collaboration requirements -- as well as the opportunities here -- demanded by the bundled payment model. (PRNewswire, January 23, 2019

Bundled-Payment Models' Downside Risk Sparks Provider Dropouts, GAO Finds
Many hospitals that participate in the CMS' voluntary bundled-payment models drop out after they are forced to take on downside risk, according to a new U.S. Government Accountability Office report. The report, which was released Tuesday, found that providers are motivated to join bundled-payment models because of the potential for financial gain but they usually end their participation in the model when they have to enter downside risk, and financial gain isn't guaranteed. Just 39% of hospitals that participated in the second model of Bundled Payments for Care Improvement continued in the model after they faced downside risk. The report was assembled by the GAO in response to a request from Sen. Ron Wyden (D-Ore.), ranking member of the Senate Finance Committee. The GAO interviewed CMS officials, its contractors and provider organizations to understand the types of providers that participate in bundled payments and compare the advantages and disadvantages of voluntary and mandatory bundled-payment models. (Modern Healthcare, January 22, 2019)

Groups did a risk-benefit analysis when deciding to participate in voluntary episode-based payment models in the first place, but when they entered the phase where they face financial penalties for failing to cut costs while providing high-quality care, they were more likely to leave the model altogether, GAO found. Just 39% of hospitals participating in the second iteration of the Bundled Payments for Care Improvement model remained in after crossing that line.

GAO compiled the report from CMS data and stakeholder interviews in response to a request from Sen. Ron Wyden, D-Ore., ranking member of the Senate Finance Committee, in December.

(Healthcare Dive, January 23, 2019)

Medicare's Bundled Payment Experiment for Joint Replacements Shows Moderate Savings
Medicare's randomized trial of a new bundled payment model for hip and knee replacement surgeries led to $812 in savings per procedure, or a 3.1% reduction in costs, when compared with traditional means of paying for care, according to new research from Harvard T.H. Chan School of Public Health and Harvard Medical School. The study found that the bundled payment model was also associated with a reduction in use of skilled nursing care after the hospitalization but had no effects on complication rates among patients. The study was published online January 2, 2019 in the New England Journal of Medicine. (see Abstract below) "Interest in bundled payments has exploded the past few years," said Michael Barnett, one of the lead authors on the study and assistant professor of health policy and management at Harvard Chan School. "The big question has always been whether this new model can lead hospitals to meaningfully reduce spending without harming patients. This study indicates that with the right financial incentive, hospitals can save money without compromising quality by sending more patients home rather than to a nursing facility." Bundled payments are an alternative payment strategy that health plans, Medicare, and Medicaid are experimenting with to reduce expenses. Unlike traditional fee-for-service payments, bundled payments provide a single, fixed payment for a procedure and follow-up care rather than individually paying all parties separately. In 2016, Medicare implemented the Comprehensive Care for Joint Replacement Model. In this randomized controlled trial, all hospitals in randomly selected cities had to accept a bundled payment model for hip or knee joint replacements. The program is the largest randomized policy experiment in Medicare to date of a new payment model. Under the model, hospitals in the selected cities received bonuses or penalties depending on how much they spent on follow-up care 90 days after joint-replacement patients were discharged. (MedicalXpress, January 3, 2019)

Background
In 2016, Medicare implemented Comprehensive Care for Joint Replacement (CJR), a national mandatory bundled-payment model for hip or knee replacement in randomly selected metropolitan statistical areas. Hospitals in such areas receive bonuses or pay penalties based on Medicare spending per hip- or knee-replacement episode (defined as the hospitalization plus 90 days after discharge).

Methods
We conducted difference-in-differences analyses using Medicare claims from 2015 through 2017, encompassing the first 2 years of bundled payments in the CJR program. We evaluated hip- or knee-replacement episodes in 75 metropolitan statistical areas randomly assigned to mandatory participation in the CJR program (bundled-payment metropolitan statistical areas, hereafter referred to as "treatment" areas) as compared with those in 121 control areas, before and after implementation of the CJR model. The primary outcomes were institutional spending per hip- or knee-replacement episode (i.e., Medicare payments to institutions, primarily to hospitals and post--acute care facilities), rates of postsurgical complications, and the percentage of "high-risk" patients (i.e., patients for whom there was an elevated risk of spending -- a measure of patient selection). Analyses were adjusted for the hospital and characteristics of the patients and procedures.

Results
From 2015 through 2017, there were 280,161 hip- or knee-replacement procedures in 803 hospitals in treatment areas and 377,278 procedures in 962 hospitals in control areas. After the initiation of the CJR model, there were greater decreases in institutional spending per joint-replacement episode in treatment areas than in control areas (differential change [i.e., the between-group difference in the change from the period before the CJR model], -$812, or a -3.1% differential decrease relative to the treatment-group baseline; P<0.001). The differential reduction was driven largely by a 5.9% relative decrease in the percentage of episodes in which patients were discharged to post--acute care facilities. The CJR program did not have a significant differential effect on the composite rate of complications (P=0.67) or on the percentage of joint-replacement procedures performed in high-risk patients (P=0.81).

Conclusions
In the first 2 years of the CJR program, there was a modest reduction in spending per hip- or knee-replacement episode, without an increase in rates of complications. (Funded by the Commonwealth Fund and the National Institute on Aging of the National Institutes of Health.)

(New England Journal of Medicine, January 2019)

Voluntary vs. Mandatory: GAO Compares Episode-Based Payment Models
The Government Accountability Office this week issued a report that examines the pros and cons of mandatory versus voluntary participation in Medicare alternative payment models. The auditors examined six Medicare episode-based payment models that were in place in early 2018, only one of which was mandatory, and asked participating providers what they liked and disliked about the models. "In general, stakeholders reported that voluntary models largely benefit providers," GAO said. "For example, these models tend to have more generous terms and providers can choose to participate in only those models where they are likely to be successful. On the other hand, mandatory models are more likely to give CMS generalizable evaluation results," GAO said. (HealthLeaders, January 23,2019)

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Panel II: Making the Business Case for Value-Based Care: Real-World Provider Case Studies Show Evidence that Focusing on Value is a Better Business Model than Maximizing Volume